How and why Alibaba is increasingly being targeted by the Chinese antitrust
China has opened an antitrust investigation into Alibaba. Chinese regulators have stepped up their grip on the mighty tech empire built by Jack Ma. What is happening and how rival platforms JD.com and Pinduoduo rejoice
After Ant's maxi double IPO in smoke and the antitrustfine for Alibaba, Christmas Eve brings a formal antitrust investigation to the e-commerce giant of Jack Ma.
And Alibaba collapses in Hong Kong after the launch of the investigation by the Chinese antitrust, the State Administration of Market Regulation Samr.
China has launched an investigation into "suspected monopoly practices" on Alibaba Group Holding Ltd. Not only that. Subsidiary Ant Group Co. has been called to a high-level meeting on financial regulations, thereby stepping up control over the two pillars of billionaire Jack Ma's internet empire.
The stock of the e-commerce giant closed a session experienced on the roller coaster, ending trading with a deadweight loss of 8.13%, at HK $ 228.2, not far from the intraday lows.
Investors have written off about 9% of capitalization.
In short, it seems that Beijing has lost patience with the enormous power of its technology magnates, increasingly perceived as a threat to political and financial stability that President Xi Jinping rewards the most, writes Bloomberg .
All the details.
THE CHINESE ANTITRUST AX HITS ALIBABA
The State Administration for Market Regulation said Thursday that it is investigating Alibaba for its "choose one of two" policy, in which traders are forced to sell exclusively on Alibaba and skip rival platforms JD.com and Pinduoduo. .
The decision to investigate the country's largest e-commerce company for monopoly practices marks the most aggressive action by Chinese regulators to rein in the growing weight of Chinese tech companies.
THE LOCATION OF ALIBABA
Alibaba said it "will actively cooperate with regulatory authorities on the investigation" and that its business operations have remained normal. In the worst case scenario, Alibaba could be fined up to 10% of the previous year's sales, the Financial Times points out .
ANT GROUP ALSO CALLED
On the same day, Xinhua , an agency backed by the Chinese state, reported that Ant Group, an affiliate of Alibaba, was called by a group of financial authorities to discuss its "compliance" work. Ant, which operates the popular Alipay e-wallet and works as an intermediary for financial services and customers, has pledged to take steps to reduce debt risks after Chinese authorities abruptly halted its colossal initial public offering last month. . ( Here the in-depth analysis by Start on all the real reasons for the Chinese stop at Ant ).
THE COLLAPSE IN THE STOCK
Following the Beijing announcement, shares in Alibaba Group Holding Ltd today plunged more than 8% (8.13%), the largest daily decline in six weeks .
BEIJING LAPS ON THE TECHNOLOGICAL COLOSSUS
But the announcement is above all the formal beginning of the Communist Party's crackdown on the crown jewel, a jewel of sprawling dominance, which spans everything from e-commerce to logistics and social media. A pressing that is part of the broader effort to curb an increasingly influential sphere, that of the Internet.
After years of allowing companies like Alibaba and its rival Tencent the freedom to grow with few restrictions, Beijing has changed course in recent months.
Once hailed as engines of economic prosperity and symbols of the country's technological prowess, Alibaba and its rivals such as Tencent face increasing pressure. These tech giants in fact gather hundreds of millions of users and have gained influence on almost every aspect of daily life in China.
FINES IN ALIBABA AND TENCENT
Just last week the State Administration of Market Regulation said it is fining Alibaba, Tencent-backed China Literature and Shenzhen Hive Box of 500,000 yuan ($ 76,464) each, the maximum under a 2008 anti-monopoly law, for not have correctly reported merger operations to the authority.
DECLINE OF THE CHINESE E-COMMERCE COLOSSUS IN SIGHT?
The Alibaba case is a "significant step" in China's anti-monopoly regulations on the Internet industry, according to the official Chinese Communist Party newspaper. To alleviate concerns that stricter regulations could deal a severe blow to the industry, the piece said the Alibaba investigation "is helpful in restoring orders and promoting healthy, long-term development of the platform economy."
But the morning selloff on Christmas Eve detracted much more from the company's market value. As Reuters wrote, this suggests that investors believe the assault on the empire built by Jack Ma, which has expanded into artificial intelligence, cloud computing and digital media, has just begun.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/innovazione/come-e-perche-alibaba-e-sempre-piu-nel-mirino-dellantitrust-cinese/ on Thu, 24 Dec 2020 14:17:07 +0000.